2011-06-27

$1,500 per ounce level may act as a magnet through the close of business on Monday

The Global Precious Metals Research Team at TD Securities highlighted why the $1,500 per ounce level may act as a magnet through the close of business on Monday: “With Friday sell off in gold our attention turns to Monday’s Comex Option expiry at 4:30 pm EST.” “With over 6,500 lots of options with a $1500 strike, that level has acted as a magnet in this afternoon’s trading session.” “Approximately 75% of this interest is puts, so we would expect that on dips below $1500 put owners will be buyers of gold.”

“On any subsequent rallies above $1500 they would turn sellers. Thus the likely scenario is we trade in a $1495-$1505 range until expiry on Monday evening.”

“Given gold’s $60 correction in 3 trading sessions and the support from this option expiry it seems more probable that gold will test the upper end of that range.”

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